ACGA leaders vow to help farmers in VeraSun debacle
Bolin says investor-owned company has done serious damage to renewable energy sector
Keith Bolin, president of the American Corn Growers Association, and a corn and hog farmer from Bureau County, Ill., was in a federal bankruptcy court in Wilmington, Del., in early December to witness U.S. Bankruptcy Judge Brendan Shannon approve a process that would allow VeraSun Energy Corporation ten business days prior to delivery of corn, contracted with farmers, to cancel those purchase contracts.
"This ruling leaves a lot of farm families in limbo, uncertain what their contracted bushels are worth and when they can actually sell them," warned Bolin. "The VeraSun bankruptcy proceedings on the East Coast are having serious reverberations throughout the Midwestern Corn Belt."
Also attending was the VeraSun Corn Suppliers spokesman Mark Kuhn, a State Representative from Charles City, Iowa, a corn farmer and an ACGA board member accompanied by ACGA board member and fellow corn farmer, Don Clifton of Milford, Del. Kuhn and others will be putting together an individual test case in bankruptcy court in an effort to determine the status of those long-term contracts because, "farmers are still being held hostage."
ACGA has been extremely supportive of the VeraSun Corn Suppliers which is a group of 124 corn producers and the number is growing from Iowa, Michigan, Minnesota, Nebraska, North Dakota and South Dakota. Led by Kuhn, the group filed an objection in the U.S. Bankruptcy Court for the District of Delaware on Nov. 21 and that objection was denied by the court Dec. 2. VeraSun announced that it will cancel contracts for seven of its plants, which were described during the proceedings as being on "hot idle", a condition in which they are capable of resuming production on short notice, but not currently producing any ethanol, due to having no line of credit available to pay for the corn they have already contracted to buy. The seven plants will continue on "hot idle" status at least through Jan. 15.
Outside the courtroom Bolin stated that, "There were only four real farmers and corn producers in the room." He added that "VeraSun now has a captive supply of grain all the way out to 2011 with no guarantee of price," and that their bankruptcy was caused by the company speculating in the grain markets, not the weakness in the ethanol markets, and the impact would be felt across the whole sector. "These folks did serious damage to the ethanol industry," he said. "If left unchecked, this debacle will erode the integrity of the markets and the rights of farmers."
Clifton observed, "The law too often provides no refuge for hard working people who play by the rules and do business in good faith. Obviously there are massive holes in the farm safety net still to be fixed."
"The court's ruling, if it stands, will have a negative impact on all corn producers across America. Under these circumstances, if VeraSun is allowed to reject corn contracts and future deliveries, this decision will create undue concern and our hopes in the future of ethanol."